Collaboration is key to Diageo and Imperial partnership

18 May 2017

Since
appointing Imperial Logistics as its third-party logistics (3PL) service
provider, leading global spirits producer Diageo has achieved a substantial
reduction in out of stocks.

Imperial
won the national contract for Diageo South Africa’s 3PL logistics services on
tender. Imperial Logistics chief strategy officer Cobus Rossouw stresses that collaboration has been the key
to the success of this partnership. “Out of stocks have been reduced by
collaboratively identifying concerns, effective reporting, visibility and daily
communication between the teams. Our team meets three times a day to discuss
KPIs, and ensure that these are constantly prioritised and reported on.” Imperial
reports on a testing 38 KPIs daily for Diageo, and there are an additional 64
KPIs on the contract.

Imperial’s
collaborative approach was evident at the outset, in the regular project
meetings that formed part of this contract’s initiation processes. Standard
operating procedures were revisited and redefined, and detailed cutover plans
were followed. Working closely together, Imperial and Diageo ensured that best
practices were in place for all of Diageo’s logistics activities. Imperial
assisted with technology and administration integration, and had a dedicated
team on standby for Diageo 24/7, to ensure that nothing was left to chance.

The
continuous improvement initiatives that have been implemented and are currently
being rolled out by Imperial include retail centralisation for Diageo, which
will entail consolidating stores to their distribution centre for replenishment
needs. A minimum order value initiative that has been put in place is
delivering the benefit of a reduction in the number of drops, which translates
into cost and time savings.

A
pilot project in which Imperial is delivering direct to home depots, thereby
by-passing the Elandsfontein warehouse, is underway, and he explains that by
replenishing stockholding home depots directly from the factory, Imperial is
reducing storage, transport, handling and security costs for Diageo.

“Imperial
has also proved that it has the ability, flexibility, scale and reach to
successfully manage Diageo’s peak trading periods (and volumes), which are
notoriously testing in the alcoholic beverages sector,” Rossouw
states. “The peak period of October, November and December accounts for
approximately 38% of Diageo’s annual volumes. Imperial supported direct
deliveries for larger volume orders to Diageo’s customers, which freed up
resources across the supply chain. This ensured that despite heightened
activity we still delivered against the demand.”

Reflecting
the truly collaborative nature of this partnership is the contract’s gain share
model, which provides a potential benefit to both parties based on the net cost
savings that can be achieved on transport and warehouse costs. “This
encourages both parties to strive for continuous improvement, and to ensure
that the best solution is implemented. We are proud to have proved why Imperial
is a leading FMCG logistics provider, and look forward to our partnership with
Diageo going from strength to strength,” Rossouw concludes.

Disclaimer: The information and opinions expressed in this website and the Supply Chain Update newsletter in no way constitutes professional advice and does not necessarily reflect the views and opinions of the editor and staff of Supply Chain Update or Vicenda.